Aside from a regular paycheque, one of the scariest things about saying goodbye to the corporate world is insurance, which comes apparent when you have to go to the doctor or dentist.
If you’re a Canadian citizen, you have access to a provincial health plan. But that doesn’t cover everything. Prescription drugs, dental care, vision, physiotherapy, travel medical, hearing aids, massage therapy, and homecare are typically up to you.
The Problem with Insuring Individuals
So, if you go to an insurance company as an individual, you might be shocked at how expensive it is compared to what was taken off your paycheque.
There’s actually some logic to this.
Basically, companies are able to get better insurance rates than smaller companies or individuals because the pool of risk is larger. There are lots of people who make few claims, offsetting the claims of other people.
There’s also a principle of “moral hazard” in which one party gets involved in a risky event knowing that it is protected against the risk and the other party will incur the cost. In the case of insurance, an individual has more knowledge of what value they will get out of insurance than the insurance company, so they might sign up for insurance knowing they will make more claims that the insurance company expects. Insuring a wider group of people protects the insurance company from moral hazard because there’s less risk that many people will make lots of claims.
It’s for these reasons that large organizations typically have lower rates and better insurance options, but there are some innovative options:
Alumni Insurance
If you graduated from a Canadian University or College, chances are there’s an alumni insurance program for you. Manulife actually delivers a lot of Alumni Health & Dental Insurance programs.
Insurance for Coworking Space Members
COHIP (a take on Ontario’s health care plan, OHIP) is the Coworking Health Insurance Plan, which is available to all independent workers in Canada through Blue Cross. You can join COHIP as an individual, or through a COHIP member organization.
The plan is designed for freelancers, creatives, start ups, small businesses, collectives and independent workers in any industry.
Insurance Provides Stability for an Unpredictable Lifestyle
We all want to minimize our monthly costs, but an unexpected dental visit or a costly medication could quickly tank your monthly budget, so you have to decide for yourself whether an additional fee per month for insurance is worth it. Before committing to anything, you also need to carefully look at the price and details of plans such as deductibles because insurance providers are famous for fineprint that could disqualify you for reimbursement.
The entrepreneurial lifestyle can be unpredictable, but if you’re in it for the long-term and especially if you’re caring for other people, insurance can help provide some stability when facing the unexpected.